Corning Incorporated (NYSE: GLW) today announced its results for
the fourth quarter of 2010.
Fourth-Quarter Highlights
- Sales were $1.77 billion, a 10%
sequential increase and up 15% year over year.
- Earnings per share were $0.66.
Excluding special items, earnings were $0.46,* a 10% sequential
decline, but 5% improvement year over year.
- Display Technologies’ wholly owned
business glass volume increased almost 20% sequentially. Volume at
Samsung Corning Precision Materials Co., Ltd., declined by almost
15% sequentially. The company’s total glass volume, which includes
its wholly owned business and SCP, was down slightly
sequentially.
- Specialty Materials sales increased 24%
sequentially and 79% year over year, driven by very strong sales in
Corning® Gorilla® Glass and continued strong performance in
advanced optics.
- Corning Environmental Technologies
sales improved 12% sequentially and 28% year over year.
Full-Year Highlights
- Sales were $6.6 billion, a 23% increase
over $5.4 billion a year ago, with each of the company’s business
segments growing year over year.
- Gross margin percentage improved to 46%
from 39% a year ago.
- Equity earnings were $2.0 billion, an
increase of 36% from a year ago.
- Earnings per share were $2.25, a 76%
increase over last year. Excluding special items, EPS was $2.07*
compared to $1.35* a year ago.
- Free cash flow for the year was $2.8
billion*.
*These are non-GAAP financial measures. The reconciliation
between GAAP and non-GAAP measures is provided in the tables
following this news release, as well as on the company’s investor
relations Web site.
Quarter Four Financial
Comparisons
Q4 2010 Q3 2010
% Change Q4 2009 % Change
Net Sales in
millions
$1,765 $1,602 10%
$1,532 15%
Net Income
in millions
$1,044 $785 33%
$740 41%
Non-GAAP
Net Income
in millions*
$733 $808 (9%)
$696 5% GAAP EPS
$0.66 $0.50 32%
$0.47 40%
Non-GAAP
EPS*
$0.46 $0.51 (10%)
$0.44 5%
Full-Year Financial Comparisons
2010 2009
% Change
Net Sales in
millions
$6,632 $5,395
23%
Net Income
in millions
$3,558 $2,008
77%
Non-GAAP
Net Income
in millions*
$3,276 $2,113
55% GAAP EPS
$2.25
$1.28 76%
Non-GAAP
EPS*
$2.07 $1.35
53%
*These are non-GAAP financial measures. The reconciliation
between GAAP and non-GAAP measures is provided in the tables
following this news release, as well as on the company’s investor
relations Web site.
Wendell P. Weeks, chairman, chief executive officer and
president, said, “This past year was one of the most successful in
the company’s 160-year history. Back in February, we said that our
goal was to emerge from the recession as a stronger, more
profitable company. I believe we have accomplished this.
“We achieved excellent financial results with strong sales
growth and net profit improvement in each of our businesses. We
substantially grew our cash position and saw the emergence of a
significant new opportunity with Corning® Gorilla® Glass. Overall,
it was a very good year for Corning.”
Fourth-Quarter Segment Results
Sales in the Display Technologies segment were $750 million,
increasing 16% sequentially and 5% year over year. Volume at the
company’s wholly owned business increased almost 20% sequentially
and about 10% year over year. Samsung Corning Precision Materials’
volume declined nearly 15% on a quarterly basis and about 5% year
over year. Glass price declines were down in the mid-single digits
sequentially, and in line with expectations.
Telecommunications segment sales were $443 million, down 5%
sequentially, but up 9% year over year. The typical quarterly
seasonal downturn was milder than originally expected.
Environmental Technologies segment sales were $232 million, a
12% sequential increase and 28% year-over-year improvement. The
company saw strong growth for its light-duty and heavy-duty diesel
engine filters as well as sustained demand for its automotive
substrates.
Specialty Materials segment sales were $197 million, a 24%
sequential increase and 79% year-over-year business improvement.
Most of the sales increase was driven by the rapidly growing market
demand for Corning® Gorilla® Glass.
Life Sciences segment sales were $140 million, a 12% sequential
increase, and 20% year-over-year growth. The growth was driven
primarily by acquisitions.
Corning’s equity earnings were $511 million, including several
one-time gains recorded as special items. Without these special
items, equity earnings would have been $408 million* for the
quarter.
In the quarter, Corning recouped $324 million ($206 million
after tax) from a settlement for business interruption and property
insurance claims in the Display Technologies segment resulting from
earthquake activity near the company’s Shizuoka, Japan facility and
a power disruption at the Taichung, Taiwan facility in 2009.
Corning ended the year with over $6.3 billion in cash and
short-term investments. This is up from $3.6 billion at the
beginning of the year.
Looking Forward
James B. Flaws, vice chairman and chief financial officer, said,
“We are entering the year with excellent momentum. Corning’s
Gorilla® Glass is poised for dramatic sales growth. We believe the
display supply chain exited 2010 with healthy levels of inventory.
Corning is well positioned in each of our business segments to take
advantage of the global economic recovery that is underway.”
In the display segment, Corning expects sequential glass volume
for both its wholly owned business and Samsung Corning Precision to
increase by the mid-single digits in the quarter. Glass price
declines are expected to be more moderate than those in the fourth
quarter.
In the company’s Telecommunications segment, first-quarter sales
are expected to be consistent with a very strong fourth quarter,
and 20% higher than from a year ago.
Environmental Technologies segment sales are expected to be in
line with the very robust fourth quarter and up about 20% over last
year.
Specialty Materials segment sequential sales growth in the
quarter should be in the range of 20% to 25%, which would be more
than double year over year, driven primarily by Corning® Gorilla®
Glass.
The Life Sciences segment first-quarter sales are expected to
increase slightly sequentially and be up about 20% year over
year.
Corning anticipates that equity earnings from Dow Corning
Corporation will improve sequentially. Overall equity earnings are
expected to be down 5%, excluding the impact of the one-time gains
in last year’s fourth quarter.
As previously disclosed, Corning’s tax rate for 2011 will move
up substantially due primarily to the non-repeat of the benefit of
foreign tax credits. Corning anticipates its 2011 full-year tax
rate will be approximately 15%. This new higher rate will take
effect in the first quarter.
Upcoming Events
Corning will host investors and provide more information on its
2011 outlook at its annual investor meeting in New York on Friday,
Feb. 4 at 9 a.m. ET at Cipriani on 42nd Street. Corning will
showcase products and technologies prior to the meeting. The
company’s exhibits, including hands-on Gorilla® Glass product
demonstrations, will be available for viewing starting at 7:30 a.m.
The exhibits will close at 9 a.m. Senior management will also be
available during the exhibit period to answer individual investor
questions. Attendees can register online at the company’s investor
relations Web site. A live audio and video cast will be available
through the company’s investor relations Web site.
Corning will also be presenting at the Goldman Sachs Technology
Conference Feb. 15, and at the Morgan Stanley Media and Telecom
Conference March 1, both in San Francisco.
Fourth-Quarter Conference Call Information
The company will host a fourth-quarter conference call on
Tuesday, Jan. 25 at 8:30 a.m. ET. To participate, please call toll
free (800) 288-8974 or for international access call (651) 291-0278
approximately 10-15 minutes prior to the start of the call. The
password is ‘QUARTER FOUR’. The host is ‘SOFIO’. To listen to a
live audio webcast of the call, go to Corning’s Web site at
www.corning.com/investor_relations and click Investor Events on the
left. A replay will be available beginning at 10:30 a.m. ET and
will run through 5:00 p.m. ET, Tuesday, Feb. 8, 2011. To listen,
dial (800) 475-6701 or for international access call (320)
365-3844. The access code is 188589. The webcast will be archived
for one year following the call.
Presentation of Information in this News Release
Non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP. Corning’s non-GAAP net income and EPS
measures exclude restructuring, impairment and other charges and
adjustments to prior estimates for such charges. Additionally, the
company’s non-GAAP measures exclude adjustments to asbestos
settlement reserves, gains and losses arising from debt
retirements, charges or credits arising from adjustments to the
valuation allowance against deferred tax assets, equity method
charges resulting from impairments of equity method investments or
restructuring, impairment or other charges taken by equity method
companies and gains from discontinued operations. The company
believes presenting non-GAAP net income and EPS measures is helpful
to analyze financial performance without the impact of unusual
items that may obscure trends in the company’s underlying
performance. Reconciliation of these non-GAAP measures can be found
on the company’s Web site by going to
www.corning.com/investor_relations and clicking Financial Reports
on the left. Reconciliation also accompanies this news release.
Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements” (within
the meaning of the Private Securities Litigation Reform Act of
1995), which are based on current expectations and assumptions
about Corning’s financial results and business operations, that
involve substantial risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business
conditions; conditions in the financial and credit
markets; currency fluctuations; tax rates; product demand
and industry capacity; competition; reliance on a concentrated
customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in
the mix of sales between premium and non-premium products; new
plant start-up or restructuring costs; possible
disruption in commercial activities due to terrorist activity,
armed conflict, political or financial instability, natural
disasters, adverse weather conditions, or major health concerns;
adequacy of insurance; equity company activities; acquisition and
divestiture activities; the level of excess or obsolete inventory;
the rate of technology change; the ability to enforce patents;
product and components performance issues; retention of key
personnel; stock price fluctuations; and adverse litigation or
regulatory developments. These and other risk factors
are detailed in Corning’s filings with the Securities and
Exchange Commission. Forward-looking statements speak only as of
the day that they are made, and Corning undertakes no obligation to
update them in light of new information or future events.
About Corning Incorporated
Corning Incorporated (www.corning.com) is the world leader in
specialty glass and ceramics. Drawing on more than 150 years of
materials science and process engineering knowledge, Corning
creates and makes keystone components that enable high-technology
systems for consumer electronics, mobile emissions control,
telecommunications and life sciences. Our products include glass
substrates for LCD televisions, computer monitors and laptops;
ceramic substrates and filters for mobile emission control systems;
optical fiber, cable, hardware & equipment for
telecommunications networks; optical biosensors for drug discovery;
and other advanced optics and specialty glass solutions for a
number of industries including semiconductor, aerospace, defense,
astronomy and metrology.
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CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited; in millions, except per share
amounts)
Three months ended Year
ended December 31, December 31, 2010 2009 2010 2009 Net
sales $ 1,765 $ 1,532 $ 6,632 $ 5,395 Cost of sales 998
883 3,583 3,302 Gross margin 767 649
3,049 2,093 Operating expenses: Selling, general and
administrative expenses 284 244 1,015 881 Research, development and
engineering expenses 166 145 603 563 Amortization of purchased
intangibles 2 2 8 10
Restructuring, impairment and other
(credits) and charges (Note 1)
(326) 53 (329) 228 Asbestos litigation (credit) charge (Note 2)
(8) 5 (49) 20 Operating income
649 200 1,801 391 Equity in earnings of affiliated companies
(Note 3) 511 461 1,958 1,435 Interest income 3 3 11 19 Interest
expense (28) (24) (109) (82) Other income, net 54 64
184 171 Income before income taxes 1,189 704
3,845 1,934 (Provision) benefit for income taxes (145)
36 (287) 74 Net income attributable to
Corning Incorporated $ 1,044 $ 740 $ 3,558 $ 2,008 Earnings
per common share attributable to Corning Incorporated: Basic (Note
4) $ 0.67 $ 0.48 $ 2.28 $ 1.30 Diluted (Note 4) $ 0.66 $ 0.47 $
2.25 $ 1.28 Dividends declared per common share $ 0.05 $ 0.05 $
0.20 $ 0.20
See accompanying notes to these financial
statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share
amounts)
December 31, 2010 2009
Assets
Current assets: Cash and cash equivalents $ 4,598 $ 2,541
Short-term investments, at fair value 1,752 1,042
Total cash, cash equivalents and short-term investments 6,350 3,583
Trade accounts receivable, net of doubtful accounts and allowances
973 753 Inventories 738 579 Deferred income taxes 431 235 Other
current assets 367 371 Total current assets 8,859
5,521 Investments 4,372 3,992 Property, net of accumulated
depreciation 8,943 7,995 Goodwill and other intangible assets, net
716 676 Deferred income taxes 2,790 2,982 Other assets 153
129
Total Assets $ 25,833 $ 21,295
Liabilities and Equity Current liabilities: Current
portion of long-term debt $ 57 $ 74 Accounts payable 798 550 Other
accrued liabilities 1,131 915 Total current
liabilities 1,986 1,539 Long-term debt 2,262 1,930
Postretirement benefits other than pensions 913 858 Other
liabilities 1,246 1,373 Total liabilities
6,407 5,700 Commitments and contingencies
Shareholders’ equity: Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion; Shares issued: 1,626 million and
1,617 million 813 808 Additional paid-in capital 12,865 12,707
Retained earnings 6,881 3,636 Treasury stock, at cost; Shares held:
65 million and 64 million (1,227) (1,207) Accumulated other
comprehensive income (loss) 43 (401) Total Corning
Incorporated shareholders' equity 19,375 15,543
Noncontrolling interests 51 52 Total equity
19,426 15,595
Total Liabilities and Equity $
25,833 $ 21,295 See accompanying notes to these financial
statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited; in millions)
Three months ended Year
ended December 31, December 31, 2010 2009 2010 2009
Cash Flows
from Operating Activities: Net income $ 1,044 $ 740 $ 3,558 $
2,008 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 222 196
846 782 Amortization of purchased intangibles 2 2
8 10 Asbestos litigation (credits) charges (8) 5
(49) 20 Restructuring, impairment and other (credits) charges (326)
53 (329) 228 Loss on retirement of debt 30 Stock compensation
charges 15 30
92 127 Earnings of affiliated companies less than (in excess of)
dividends received 850 (145)
(246) (680) Deferred tax provision (benefit) 83 (49)
68 (218) Restructuring payments (8) (18)
(66) (89) Cash received from settlement of insurance claims 259 259
Credits issued against customer deposits (7) (46)
(83) (253) Employee benefit payments in excess of expense (184)
(22)
(265) (10) Changes in certain working capital items: Trade accounts
receivable (100) 64
(162) (201) Inventories (13) 34
(160) 238 Other current assets 17 3
42 16 Accounts payable and other current liabilities, net of
restructuring payments 184 32
192 56 Other, net 62 34
100 43
Net cash provided by operating activities
2,092 913
3,835 2,077
Cash Flows from Investing
Activities: Capital expenditures (473) (163)
(1,007) (890) Acquisitions of businesses, net of cash received (63)
(63) (410) Net proceeds from sale or disposal of assets 6 1 21
Short-term investments - acquisitions (768) (496) (2,768) (1,372)
Short-term investments - liquidations 743 422
2,061 1,281 Other, net 1 7
Net cash used in investing activities (560)
(231)
(1,769) (1,370)
Cash Flows from Financing
Activities: Net repayments of short-term borrowings and current
portion of long-term debt
(5)
(2)
(75)
(86) Proceeds from issuance of long-term debt, net 689 346
Retirements of long-term debt, net (100)
(364) Principal payments under capital lease obligations (8) (9)
(10) Proceeds from issuance of common stock, net 2
15 20 Proceeds from the exercise of stock options 16 16
55 24 Dividends paid (78) (78) (313) (312) Other, net
3
Net cash (used in) provided by financing activities
(175) (62)
(2) (15) Effect of exchange rates on cash (61)
(41)
(7) (24) Net increase in cash and cash equivalents 1,296 579
2,057 668 Cash and cash equivalents at beginning of period
3,302 1,962
2,541 1,873
Cash and cash equivalents at end of
period $ 4,598 $ 2,541 $ 4,598 $ 2,541
CORNING INCORPORATED
AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Our
reportable operating segments include Display Technologies,
Telecommunications, Environmental Technologies, Specialty Materials
and Life Sciences. Display Telecom- Environmental Specialty
Life All Technologies munications Technologies Materials Sciences
Other Total
Three months ended December 31,
2010 Net sales $ 750 $ 443 $ 232 $ 197 $ 140 $ 3 $ 1,765
Depreciation (1) $ 127 $ 29 $ 28 $ 29 $ 8 $ 3 $ 224 Amortization of
purchased intangibles $ 2 $ 2 Research, development and engineering
expenses (2) $ 24 $ 31 $ 26 $ 26 $ 3 $ 34 $ 144 Restructuring,
impairment and other credits (3) $ (324) $ (2) $ (326) Equity in
earnings of affiliated companies (4) $ 369 $ 2 $ 13 $ 384 Income
tax (provision) benefit $ (227) $ (8) $ (8) $ (1) $ (6) $ 16 $
(234) Net income (loss) (5) $ 883 $ 18 $ 15 $ 2 $ 12 $ (29) $ 901
Three months ended December 31, 2009 Net sales
$ 717 $ 405 $ 181 $ 110 $ 117 $ 2 $ 1,532 Depreciation (1) $ 120 $
31 $ 24 $ 11 $ 7 $ 4 $ 197 Amortization of purchased intangibles $
2 $ 2 Research, development and engineering expenses (2) $ 21 $ 26
$ 20 $ 18 $ 4 $ 35 $ 124 Restructuring, impairment and other
charges $ 2 $ 27 $ 6 $ 35 Equity in earnings of affiliated
companies $ 321 $ 1 $ 1 $ 1 $ 324 Income tax (provision) benefit $
(95) $ 5 $ (7) $ 3 $ (5) $ 13 $ (86) Net income (loss) (5) $ 619 $
(19) $ 15 $ (6) $ 10 $ (29) $ 590
Year ended
December 31, 2010 Net sales $ 3,011 $ 1,712 $ 816 $ 578 $
508 $ 7 $ 6,632 Depreciation (1) $ 513 $ 118 $ 105 $ 72 $ 32 $ 12 $
852 Amortization of purchased intangibles $ 1 $ 7 $ 8 Research,
development and engineering expenses (2) $ 90 $ 115 $ 96 $ 87 $ 16
$ 114 $ 518 Restructuring, impairment and other credits (3) $ (324)
$ (3) $ (2) $ (329) Equity in earnings of affiliated companies (4)
$ 1,452 $ 3 $ 5 $ 45 $ 1,505 Income tax (provision) benefit $ (618)
$ (46) $ (20) $ 13 $ (30) $ 50 $ (651) Net income (loss) (5) $
2,990 $ 97 $ 42 $ (27) $ 60 $ (75) $ 3,087
Year ended
December 31, 2009 Net sales $ 2,426 $ 1,677 $ 590 $ 331 $
366 $ 5 $ 5,395 Depreciation (1) $ 479 $ 130 $ 98 $ 46 $ 20 $ 13 $
786 Amortization of purchased intangibles $ 10 $ 10 Research,
development and engineering expenses (2) $ 81 $ 94 $ 107 $ 58 $ 12
$ 125 $ 477 Restructuring, impairment and other charges $ 31 $ 42 $
28 $ 17 $ 8 $ 4 $ 130 Equity in earnings (loss) of affiliated
companies $ 1,102 $ (3) $ 7 $ 32 $ 1,138 Income tax (provision)
benefit $ (279) $ (19) $ 24 $ 28 $ (19) $ 45 $ (220) Net income
(loss) (5) $ 1,992 $ 19 $ (42) $ (54) $ 39 $ (80) $ 1,874
(1) Depreciation expense for Corning’s
reportable segments includes an allocation of depreciation of
corporate property not specifically identifiable to a segment.
(2) Research, development, and engineering
expense includes direct project spending which is identifiable to a
segment.
(3) In the three months and year ended
December 31, 2010, restructuring, impairment and other credits
includes $324 million on the settlement of business interruption
and property damage insurance claims in the Display Technologies
segment resulting from earthquake activity near the Shizuoka, Japan
facility and a power disruption at the Taichung, Taiwan facility in
2009.
(4) In the three months and year ended
December 31, 2010, equity in earnings of affiliated companies
includes a $61 million credit in the Display Technologies segment
for our share of a revised Samsung Corning Precision tax holiday
calculation agreed to by the Korean National Tax service.
(5) Many of Corning’s administrative and
staff functions are performed on a centralized basis. Where
practicable, Corning charges these expenses to segments based upon
the extent to which each business uses a centralized function.
Other staff functions, such as corporate finance, human resources
and legal are allocated to segments, primarily as a percentage of
sales.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
A reconciliation of reportable segment
net income to consolidated net income follows (in millions):
Three months ended Year ended December 31,
December 31, 2010 2009 2010 2009
Net income of reportable segments $ 930 $ 619 $ 3,162 $ 1,954
Non-reportable segments (29) (29) (75) (80) Unallocated amounts:
Net financing costs (1) (46) (36) (183) (122) Stock-based
compensation expense (15) (30) (92) (127) Exploratory research (15)
(15) (59) (61) Corporate contributions (7) (4) (33) (27) Equity in
earnings of affiliated companies, net of impairments (2) 127 137
453 297 Asbestos litigation (3) 8 (5) 49 (20) Other corporate items
(4) 91 103 336
194 Net income $ 1,044 $ 740 $ 3,558
$ 2,008
(1) Net financing costs include interest
income, interest expense, and interest costs and investment gains
and losses associated with benefit plans.
(2) Equity in earnings of affiliated
companies, net of impairments and taxes is primarily equity in
earnings of Dow Corning Corporation which includes the following
items:
--- In the three months and year ended
December 31, 2010, Corning recorded a $26 million credit for our
share of a valuation allowance on foreign deferred tax assets.
Corning also recorded a $16 million credit for our share of excess
foreign tax credits from foreign dividends of Dow Corning
Corporation.
--- In the year ended December 31, 2010, a
$21 million credit for our share of U.S. advanced energy
manufacturing tax credits.
--- In the three months and year ended
December 31, 2009, a $29 million credit primarily for our share of
excess foreign tax credits from foreign dividends at Dow Corning
Corporation.
--- In the year ended December 31, 2009, a
charge of $29 million for our share of restructuring charges.
(3) In the three months and year ended
December 31, 2010, Corning recorded a net credit of $8 million and
a net credit of $49 million, respectively, to adjust the asbestos
liability for the change in value of certain components of the
modified PCC Plan. In the three months and year ended December 31,
2009, Corning recorded charges of $5 million and $20 million,
respectively, to adjust the asbestos liability for the change in
value of certain components of the amended PCC Plan and the
estimated liability for non-PCC asbestos claims.
(4) Other corporate items include the tax
impact of the unallocated amounts and the following significant
items:
--- In the year ended December 31, 2010,
Corning recorded a loss of $30 million ($19 million after-tax) from
the repurchase of $126 million principal amount of our 6.2% senior
unsecured notes due March 15, 2016 and $100 million principal
amount of our 5.9% senior unsecured notes due March 15, 2014.
--- In the three months and year ended
December 31, 2009, Corning recorded a $58 million tax benefit which
included the following items: a $10 million net valuation allowance
due to a change in judgment about the realizability of U.S. and
United Kingdom deferred tax assets in future years; a $41 million
tax benefit to reflect a deferred tax asset associated with
non-taxable Medicare subsidies; a $27 million U.S. tax credit for
research and experimentation expenses.
--- In the three months and year ended
December 31, 2009, restructuring changes of $18 million ($12
million after-tax) and $98 million ($64 million after-tax),
respectively.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
1. Insurance Settlement
In the fourth quarter of 2010, we recorded $324 million
($206 million after-tax) on the settlement of business interruption
and property damage insurance claims in the Display Technologies
segment resulting from earthquake activity near the Shizuoka, Japan
facility and a power disruption at the Taichung, Taiwan facility in
2009.
2. Asbestos Litigation
On March 28, 2003, Corning announced that
it had reached agreement with the representatives of asbestos
claimants for the settlement of all current and future asbestos
claims against Corning and Pittsburgh Corning Corporation (PCC)
which might arise from PCC products or operations (the 2003
Plan). On December 21, 2006, the Bankruptcy Court issued
an order denying confirmation of the 2003 Plan. On
January 29, 2009, a proposed plan of reorganization (the Amended
PCC Plan) resolving issues raised by the Court in denying the
confirmation of the 2003 Plan was filed with the Bankruptcy
Court.
As a result, Corning believes the Amended
PCC Plan, modified as indicated below, now represents the most
probable outcome of this matter and expects that the Amended PCC
Plan will be confirmed by the Court. Corning believes the 2003 Plan
no longer serves as the basis for the Company's best estimate of
liability. The proposed arrangement under the Amended
PCC Plan requires Corning to contribute its equity interest in PCC
and Pittsburgh Corning Europe, N.V. (PCE) and to contribute a fixed
series of cash payments recorded at present
value. Corning will have the option to contribute shares
rather than cash, but the liability is fixed by dollar value and
not number of shares. The Amended PCC Plan does not
include certain non-PCC asbestos claims that may be or have been
raised against Corning. Corning has recorded an
additional amount for such claims in its estimated asbestos
litigation liability. In the first quarter of 2010,
documents were filed with the Bankruptcy Court modifying the
Amended PCC Plan by reducing the amount of cash expected to be
contributed by Corning under the Amended PCC Plan in return for
Corning relinquishing its claim for reimbursement of its payments
and contributions under the Amended Plan from certain insurance
carriers involved in the proceedings.
In the fourth quarter of 2010, we recorded
a net credit of $8 million ($5 million after-tax) to adjust the
asbestos litigation liability for the change in value of the
components of the modified PCC Plan.
3. Equity in Earnings of Affiliated Companies
In the fourth quarter of 2010, equity in earnings of
affiliated companies included credits related to Dow Corning
Corporation of $26 million ($24 million after-tax) for our share of
a release of valuation allowance on foreign deferred tax assets,
and $16 million ($15 million after-tax) for our share of excess
foreign tax credits from foreign dividends. Equity in earnings also
includes a $61 million ($61 million after-tax) credit for our share
of a revised Samsung Corning Precision tax holiday calculation
agreed to by the Korean National Tax Service.
4.
Weighted Average Shares Outstanding Weighted average
shares outstanding are as follows (in millions):
Three
months ended Year ended December 31, December
31, 2010 2009 2010 2009
Basic 1,560 1,552 1,558 1,550 Diluted 1,584 1,576 1,581 1,568
Diluted used for non-GAAP measures
1,584 1,576 1,581 1,568
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2010 Q1 Q2
Q3 Q4 Total Display
Technologies $ 782 $ 834 $ 645 $ 750 $ 3,011
Telecommunications Fiber and cable 190 227 232 229 878
Hardware and equipment 174 214 232 214
834 364 441 464 443 1,712
Environmental
Technologies Automotive 117 109 119 117 462 Diesel 75
75 89 115 354 192 184 208 232 816
Specialty Materials 96 126 159 197 578
Life
Sciences 118 125 125 140 508
Other 1
2 1 3 7
Total $ 1,553 $
1,712 $ 1,602 $ 1,765 $ 6,632
2009 Q1
Q2 Q3 Q4 Total Display
Technologies $ 357 $ 673 $ 679 $ 717 $ 2,426
Telecommunications Fiber and cable 192 235 251 231 909
Hardware and equipment 193 202 199 174
768 385 437 450 405 1,677
Environmental
Technologies Automotive 64 85 103 108 360 Diesel 46
47 64 73 230 110 132 167 181 590
Specialty Materials 60 71 90 110 331
Life
Sciences 76 81 92 117 366
Other 1 1
1 2 5
Total $ 989 $ 1,395 $
1,479 $ 1,532 $ 5,395 The above supplemental information is
intended to facilitate analysis of Corning’s businesses.
CORNING
INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended December 31,
2010
(Unaudited; amounts in millions, except
per share amounts)
Corning’s net income and earnings per share (EPS) excluding
special items for the fourth quarter of 2010 are non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. Non-GAAP financial measures are not in
accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company’s underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
Per
Income Before
Net Share
Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 0.46 $ 754 $ 733 Special items:
Insurance settlement (a) 0.13 324 206 Asbestos settlement
(b) - 8 5 Equity in earnings of affiliated companies (c)
0.07 103 100 Total EPS and net income $
0.66 $ 1,189 $ 1,044
(a) In the fourth quarter of 2010, Corning
recorded $324 million ($206 million after-tax) on the settlement of
business interruption and property damage insurance claims in the
Display Technologies segment resulting from earthquake activity
near the Shizuoka, Japan facility and a power disruption at the
Taichung, Taiwan facility in 2009.
(b) In the fourth quarter of 2010, Corning
recorded a net credit of $8 million ($5 million after-tax) to
adjust the asbestos liability for the change in value of the
components of the modified PCC Plan.
(c) In the fourth quarter of 2010, equity
in earnings of affiliated companies included a credit of $26
million ($24 million after-tax) for our share of a release of
valuation allowance on foreign deferred tax assets, a $16 million
($15 million after-tax) credit for our share of excess foreign tax
credits from foreign dividends and a $61 million credit for our
share of a revised Samsung Corning Precision tax holiday
calculation agreed to by the Korean National Tax Service.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended December 31,
2009
(Unaudited; amounts in millions, except
per share amounts)
Corning’s net income and earnings per share (EPS) excluding
special items for the fourth quarter of 2009 are non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. Non-GAAP financial measures are not in
accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company’s underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
Per
Income Before
Net Share
Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 0.44 $ 733 $ 696 Special items:
Restructuring, impairment, and other charges (a) (0.03) (53) (38)
Asbestos settlement (b) - (5) (3) Equity in earnings
of affiliated companies (c) 0.02 29 27 Provision for income
taxes (d) 0.04 - 58 Total EPS and net
income $ 0.47 $ 704 $ 740
(a) In the fourth quarter of 2009, Corning
recorded a charge of $53 million ($38 million after-tax) as part of
the Company’s corporate-wide restructuring plan in response to
lower sales in 2009.
(b) In the fourth quarter of 2009, Corning
recorded a charge of $5 million ($3 million after-tax) to adjust
the asbestos liability for the change in value of certain
components of the Amended PCC Plan and the estimated liability for
non-PCC asbestos claims.
(c) In the fourth quarter of 2009, equity
in earnings of affiliated companies included a credit of $29
million ($27 million after-tax) primarily for Corning’s share of
excess foreign tax credits from foreign dividends at Dow Corning
Corporation.
(d) In the fourth quarter of 2009, Corning
recorded a $58 million tax benefit which included the following
items: a $27 million U.S. tax credit for research and
experimentation expenses; a $41 million tax benefit to reflect a
deferred tax asset associated with a non-taxable Medicare subsidy;
and a $10 million valuation allowance due to a change in judgment
about the realizability of U.S. and U.K. deferred tax assets in
future years.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended September 30,
2010
(Unaudited; amounts in millions, except
per share amounts)
Corning’s net income and earnings per share (EPS) excluding
special items for the third quarter of 2010 are non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. Non-GAAP financial measures are not in
accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company’s underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
Per
Income Before
Net Share
Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 0.51 $ 835 $ 808 Special items:
Restructuring charges (a) - (6) (4) Loss on repurchase of
debt (b) (0.01) (30) (19) Total EPS and
net income $ 0.50 $ 799 $ 785
(a) In the third quarter of 2010, Corning
recorded a charge of $6 million ($4 million after-tax) to adjust
the asbestos liability for the change in value of the components of
the modified PCC Plan.
(b) In the third quarter of 2010, Corning
recorded a $30 million loss ($19 million after-tax) on the
repurchase of $126 million principal amount of our 6.2% senior
unsecured notes due March 15, 2016 and $100 million principal
amount of our 5.9% senior unsecured notes due March 15, 2014.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2010
(Unaudited; amounts in millions, except
per share amounts)
Corning’s net income and earnings per share (EPS) excluding
special items for the year ended December 31, 2010 are non-GAAP
financial measures within the meaning of Regulation G of the
Securities and Exchange Commission. Non-GAAP financial measures are
not in accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company’s underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
Per
Income Before
Net Share
Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 2.07 $ 3,376 $ 3,276 Special
items: Restructuring, impairment and other charges (a) - 2 1
Insurance settlement (b) 0.13 324 206 Asbestos settlement
(c) 0.02 49 30 Equity in earnings of affiliated companies
(d) 0.08 124 120 Loss on repurchase of debt (e) (0.01) (30)
(19) Provision for income taxes (f) (0.04) -
(56) Total EPS and net income $ 2.25 $ 3,845 $ 3,558
(a) In 2010, Corning recorded a credit of
$2 million ($1 million after-tax) for adjustments to restructuring
reserves.
(b) In 2010, Corning recorded $324 million
($206 million after-tax) on the settlement of business interruption
and property damage insurance claims in the Display Technologies
segment resulting from earthquake activity near the Shizuoka, Japan
facility and a power disruption at the Taichung, Taiwan facility in
2009.
(c) In 2010, Corning recorded a net credit
of $49 million ($30 million after-tax) to adjust the asbestos
liability for change in value of the components of the modified PCC
Plan.
(d) In 2010, equity in earnings of
affiliated companies included a credit of $21 million ($20 million
after-tax) primarily for Corning’s share of advanced energy
manufacturing tax credits at Dow Corning Corporation. Also,
included is a credit of $26 million ($24 million after-tax) for our
share of a release of valuation allowance on foreign deferred tax
assets, a $16 million ($15 million after-tax) credit for our share
of excess foreign tax credits from foreign dividends at Dow Corning
Corporation and a $61 million credit for our share of a revised
Samsung Corning Precision tax holiday calculation agreed to by the
Korean National Tax Service.
(e) In 2010, Corning recorded a $30
million loss ($19 million after-tax) on the repurchase of $126
million principal amount of our 6.2% senior unsecured notes due
March 15, 2016 and $100 million principal amount of our 5.9% senior
unsecured notes due March 15, 2014.
(f) In 2010, Corning recorded a $56
million tax charge from the reversal of the deferred tax asset
associated with a Medicare subsidy.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2009
(Unaudited; amounts in millions, except
per share amounts)
Corning’s net income and earnings per share (EPS) excluding
special items for the year ended December 31, 2009 are non-GAAP
financial measures within the meaning of Regulation G of the
Securities and Exchange Commission. Non-GAAP financial measures are
not in accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company’s underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
Income (Loss)
Net Per
Before
Income Share
Income Taxes
(Loss) Earnings per share (EPS) and net income,
excluding special items $ 1.35 $ 2,182 $ 2,113 Special
items: Restructuring, impairment and other charges (a) (0.10) (228)
(151) Asbestos settlement (b) (0.01) (20) (12) Equity
in earnings of affiliated companies (c) - - - Provision for
income taxes (d) 0.04 - 58 Total EPS
and net income $ 1.28 $ 1,934 $ 2,008
(a) In 2009, Corning recorded a charge of
$228 million ($151 million after-tax) as part of the Company’s
corporate-wide restructuring plan in response to lower sales in
2009.
(b) In 2009, Corning recorded a charge of
$20 million ($12 million after-tax) to adjust the asbestos
liability for change in value of the components of the Amended PCC
Plan and the estimated liability for non-PCC asbestos claims.
(c) In 2009, equity in earnings of
affiliated companies included a charge of $29 million ($27 million
after-tax) for our share of restructuring charges and a credit of
$29 million ($27 million after-tax) primarily for our share of
excess foreign tax credits from foreign dividends at Dow Corning
Corporation.
(d) In 2009, Corning recorded a $58
million tax benefit which included the following items: a $27
million U.S. tax credit for research and experimentation expenses;
a $41 million tax benefit to reflect a deferred tax asset
associated with a non-taxable Medicare subsidy; and a $10 million
valuation allowance due to a change in judgment about the
realizability of U.S. and U.K. deferred tax assets in future
years.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE
Three Months and Year Ended December
31, 2010
(Unaudited; amounts in millions)
Corning’s free cash flow financial measure for the three months and
year ended December 31, 2010 is a non-GAAP financial measure within
the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP financial measures
are helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company’s underlying
performance. A detailed reconciliation is provided below outlining
the differences between this non-GAAP measure and the directly
related GAAP measures.
Three
months ended
Year ended
December 31,
December 31,
2010
2010
Cash flows from operating activities $ 2,092 $ 3,835
Less: Cash flows from investing activities
(560)
(1,769)
Plus: Short-term investments - acquisitions 768 2,768
Less: Short-term investments - liquidations (743)
(2,061) Free cash flow $
1,557
$
2,773
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